The trade war crushed stocks this week.

The market endured its worst week since 2020, with the S&P 500 losing nearly 7% over the last five trading days, while the Nasdaq 100 slipped into bear market territory for the first time since 2022.

Here’s what the pros are saying about the decline — and what could be coming next.

Brace for a recession in the US

Tariffs appear to have pushed the US economy even closer to a downturn, according to John Hussman, the president of Hussman Investment Trust.

Hussman said his firm’s recession gauge, called the Hussman Recession Warning Composite, flashed a positive signal on April 1, the day before Trump unveiled his “Liberation Day” tariffs to the world.

That signal, in combination with other signs of a weakening economy, is making the case that a downturn is coming, he said.

“Wednesday’s tariff announcement only amplifies recession risks that have been developing for months,” Hussman wrote in a note to clients.

JPMorgan told clients it raised its risk of a coming recession to 60%, up from its prior estimate of 40%.

“Disruptive US policies have been recognized as the biggest risk to the global outlook all year,” the bank wrote in a note on Friday. “We thus emphasize that these policies, if sustained, would likely push the US and possibly global economy into recession this year,” it later added.

“The Trump administration’s actions this week have the potential not only to tip the US into a recession, but to devastate the global economy,” Emily Bowersock Hill, the CEO of Bockersock Capital Partners, wrote in a note. “Other countries, including China, are already beginning to retaliate against US tariffs, and that retaliation will slow global growth.”

Steep rate cuts could be coming

The Fed could react to economic weakness by cutting interest rates even faster than markets anticipated, according to Jason Pride, the chief of investment strategy at Glenmede. Four to five rate cuts are now looking to be the “new baseline for 2025,” he wrote in a note on Friday.

“It’s much too soon to see any downstream impacts from trade policy in the jobs market and the Fed is unlikely to wait for that sort of evidence before adjusting its thought process on the appropriate stance of monetary policy,” Pride added.

The Fed is likely to intervene “sooner rather than later,” according to Hassan Fawaz, the chairman of the financial firm GivTrade.

“We believe that the Federal Reserve will be compelled to cut rates promptly to mitigate the risk of a full-blown recession in case the trade tensions are not resolved,” Fawaz said.

“The Fed will likely provide some stimulus over coming months. But this is a government-driven shock not a central bank-driven shock,” Seema Shah, the chief global strategist at Principal Asset Management, said.

For his part on Friday, Fed chair Jerome Powell indicated that the central bank was in wait-and-see mode as tariffs could jack up inflation.

“We are well positioned to wait for greater clarity before considering any adjustments to our policy stance,” Powell said at an event in Virginia.

Expect more pain for stocks

Investors believe the outlook for stocks has deteriorated meaningfully in the event of a prolonged trade war.

“The bull market is dead, and it was destroyed by ideologues and self-inflicted wounds,” Bowersock’s Hill wrote. “We have revised our year-end target on the S&P 500 from 6000 to 5700.”

Wedbush Securities said it saw particular challenges lying ahead for the artificial intelligence trade, which has boomed for most of the last two years.

“The concept of taking the US back to the 1980’s ‘manufacturing days’ with these tariffs is a bad science experiment that in the process will cause an economic Armageddon in our view and crush the tech trade, AI Revolution theme, and overall industry in the process,” analysts wrote in a note on Friday.

“The tech world (and consumers) depend on the supply chain to manufacture and deliver these products to consumers and hands the best technology products in the world at the lowest prices. These are facts that cannot be debated,” the firm added.